Macroeconomic Uncertainty Will Weigh Heavily While Upgrades Will Yield Promise

Key Takeaways

• Sustained subscriber growth and digital service expansion are challenged by competitive pressures, currency volatility, and regulatory risks, threatening margins and earnings stability.
  
• Investments in infrastructure, fintech, and value-added services support diversification, but rising capital costs and revenue cannibalization from OTT platforms risk future cash flow and growth.
  
• Losses from unprofitable investments, intense competition, macroeconomic risk, heavy capital spending, and regulatory threats are straining profitability and increasing financial pressure.

Catalysts

Provides converged telecommunication and technology services in Turkey, Belarus, Turkish Republic of Northern Cyprus, and the Netherlands.

• While Turkcell is benefiting from sustained growth in wireless and broadband subscribers alongside rising ARPU due to digital payment adoption and postpaid customer additions, the company faces heightened competitive pressures in both mobile and fixed segments-including the potential entry of new operators such as Türksat-which could ultimately erode ARPU growth and compress net margins.
  
• Although Turkcell continues to aggressively expand in data center, cloud, and IoT solutions, achieving strong revenue growth in these segments, the structural depreciation of the Turkish lira and persistent high inflation pose ongoing risks to real earnings power and increase the cost of servicing foreign-denominated debt, threatening long-term profitability.
  
• Despite continued investments in fiber and mobile infrastructure, with readiness for 5G and the ability to capitalize on future integrated service trends, Turkcell remains heavily exposed to Turkey's local macroeconomic volatility, limited by international diversification and subject to regulatory unpredictability that could negatively impact revenue stability over time.
  
• While diversification into digital and fintech services is increasing customer stickiness and opening up new revenue streams, the accelerating global shift toward OTT and digital platforms continues to cannibalize traditional telecom revenues, intensifying industry-wide commoditization and undermining top-line growth potential.
  
• Even though the company is demonstrating disciplined cost management and maintains a strong balance sheet with effective hedging, the necessity for elevated capital expenditures-particularly for 5G and renewable energy investments-may continue to pressure free cash flow, especially if growth in ARPU or value-added services does not keep pace with the rising investment burden, risking future net margin and earnings dilution.

Turkcell Iletisim Hizmetleri Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Turkcell Iletisim Hizmetleri compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Turkcell Iletisim Hizmetleri's revenue will grow by 30.9% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from 7.0% today to 9.8% in 3 years time.
• The bearish analysts expect earnings to reach TRY 39.2 billion (and earnings per share of TRY 18.06) by about August 2028, up from TRY 12.5 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 13.0x on those 2028 earnings, down from 16.5x today. This future PE is lower than the current PE for the US Wireless Telecom industry at 16.5x.
• Analysts expect the number of shares outstanding to decline by 0.17% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 28.78%, as per the Simply Wall St company report.

Turkcell Iletisim Hizmetleri Future Earnings Per Share Growth

Risks

• Turkcell's significant losses from its 23% stake in TOGG, recording a TRY 1.2 billion loss in the quarter and a total of around $226 million loss for the first half, are a persistent drag on net income, and there is no short-term prospect for profitability from this investment according to management's own guidance.
  
• Competitive pressures in both mobile and fixed broadband markets are intense, with increased mobile number portability and stable-to-flat fixed broadband subscriber numbers due to aggressive offers from smaller ISPs, which risks eroding revenues and squeezing margins if price-based competition escalates.
  
• Turkcell remains highly exposed to the Turkish macroeconomic environment, with a year-end inflation forecast of 30.5%, structural lira depreciation, and elevated interest rates, all of which heighten currency and funding risk that could undermine real earnings growth and increase the financial burden for foreign-denominated debt repayments.
  
• The heavy capital expenditure required for network upgrades, 5G rollout, and fiber expansion, especially with 65% of the CapEx budget allocated to network enhancements, threatens to pressure free cash flow and net margins if revenue growth from these investments does not materialize as expected.
  
• Ongoing risk of additional regulatory intervention and market disruption, such as potential competitive entry by Türksat or unequal policy advantages for incumbent rivals (e.g., Türk Telekom's concession renewal), may damage Turkcell's market share and limit price flexibility, impacting both top-line revenue and operating profitability over the long term.

Valuation

• The assumed bearish price target for Turkcell Iletisim Hizmetleri is TRY110.5, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Turkcell Iletisim Hizmetleri's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of TRY206.0, and the most bearish reporting a price target of just TRY110.5.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be TRY399.5 billion, earnings will come to TRY39.2 billion, and it would be trading on a PE ratio of 13.0x, assuming you use a discount rate of 28.8%.
  
• Given the current share price of TRY94.75, the bearish analyst price target of TRY110.5 is 14.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.